Boundary-Crossing Innovation in Logistics : Interconnected Logistics

During the freight delivery process, there are some market needs that cannot be met by simple delivery and storage services. Services directly related to freight delivery such as packaging, transportation, storage, categorizing, and customs clearance are needed as are other related services such as payment, verification, inspection, and repairs. For example, when cargo is shipped for commercial purpose, the shipper must receive payment securely from the buyer. That is why in regions where finance is underdeveloped like in Southeast Asia, payment is included in the logistics service. An example of such a service would be cash on delivery. Another example would be a thirdparty regularly checking the freight’s condition for freight that needs special packaging or extra attendance.

B2B services offering comprehensive proxy fulfillment services such as storing, packaging, and transportation already exist to provide a more convenient customer experience. However, these services aren’t available for individual customers. Even for some businesses, such services are performed under a closed private contract and thus have limitations to provide flexible services.

dKargo will create new logistics services, which were not possible before, by connecting smart contracts with diverse services necessary for users. In order to do so, dKargo will design a contract to deliver the freight to the consignee while enabling other necessary offline services without any extra effort, and also will use smart contracts for performance guarantee and payment. This will allow dKargo to provide a wider range of logistics services that can also increase the value of freight transportation. Such new services include packaging, storing, inspection, repairs, washing, and conditional payment. dKargo’s goal is to connect relevant services to logistics together to provide a more customized experience.

This expanded scope of logistics can address some of the problems exist in many different sectors. In order to better understand, some case examples in the P2P second-hand trading market are useful. For instance, the entire P2P second-hand trading market’s size has almost reached KRW 18 trillion. However, second-hand goods are often traded inefficiently due to the market’s structural limitations. The risk for fraud or dispute is constantly present because it is difficult for the seller and buyer to trust each other and also trust the quality of the goods. For example, there are cases where the seller ships the goods but fails to receive payment, or when the buyer sends the money but fails to receive the goods. Even if both sides have no intention of cheating, disputes can arise because the two parties may disagree on the value of the\goods. Oftentimes, a middleman is paid a high commission or despite the inconvenience, both parties meet face to face to strike a deal in order to minimize such risks.

dKargo has come up with a solution to solve the problems riddling the second-hand trading market. It is to connect a variety of services. Imagine a scenario when a buyer and seller are trading a second-hand good. In this case, the biggest problem is that the both parties are unsure whether the counter party will send the promised payment and good to each other or not. If they want to close the deal, then they have no other choice but to trust each other. And often, some incidents occur where a buyer makes a payment and receives a brick in a parcel, or a seller sends the good but never receives a payment. dKargo can easily solve this problem – when making a logistics contract at dKargo, a verification service of the goods by the participants responsible for first-mile and last-mile delivery can be added. So, when receiving the goods, the participants of first-mile and last-mile delivery can verify whether the goods are the correctly ordered goods and record them on the blockchain, which can be further used as an evidence when dispute occurs. Furthermore, by linking these records for payment with smart contracts, any issues regarding receiving payments can be resolved too. These processes allow the logistic network participants to earn extra income and thereby provide additional value to all users and participants of the network. Moreover, if the parties find difficult to reach a mutual agreement about the value of a traded good, a third-party expert can make an intervention during the trading process to appraise the value of the good and hence, this type of issue between the two parties can be resolved. On top of this, a variety of other necessary services in the second-hand trading such as repairs, cleaning and storage will be available so that users can enjoy these services more easily.

The abovementioned example of the second-hand trading market is a mere fraction of the type of services that can be provided. Connecting logistics to various services can be realized in more diverse ways. Through the flexible collaboration of participants and smart contracts, almost all types of online and offline services can be connected to logistics, which will solve many challenges we face.